TrueWealth’s 1st Quarter 2017 Market Commentary

TrueWealth’s 1st Quarter 2017 Market Commentary


Amid a backdrop of domestic and international political turmoil, the markets notched some nice returns for the quarter. Virtually all asset classes posted positive returns, U.S. REITS and Global Bonds, being the exceptions.

Value and Small Cap are areas of the market we overweight because of the evidence of higher average returns historically. But they are not evident all the time. While they provided superior performance in 2016, we only see small cap helping in international markets but value trailing in almost every category domestically and internationally.

Developed International and Emerging Markets stocks outperformed U.S. markets, but much of that outperformance can be attributed to a falling dollar. As the dollar declines, unhedged international exposure looks better. Emerging Markets in particular were off to a roaring start for the year returning over 11% for the quarter.

For a full review of market results for the quarter you can click here.


Given the tenor of domestic politics and international tensions, you could have the impression that there is substantial risk in global markets. You would be right.

Cue the broken record – let me point out one more time that while market risks may seem a bit higher, our set of circumstances today is not particularly unusual when placed in historical context. Also, trying to adjust your portfolio to these risks based on perceived future returns is futile and only increases the potential variability of financial outcomes, including negative ones.

As we’ve stated ad nauseam, a better approach is to identify your unique financial requirements of your portfolio based upon your specific personal goals, and then invest the portfolio based upon the time frame in which it’s intended. Simply put, cash needed in less than 10 years should be mostly invested in bonds. The balance should be in equities, globally diversified in low cost market-based mutual funds. Assuming the planning is solid, that investment approach should give you a positive investment experience.

What’s New?

As we’ve noted in recent newsletters, the evidence for market-based or index funds continues. In this sense, SPIVAs (S&P Index vs. Active) most recent study doesn’t tell us anything we didn’t already know – that traditional active management underperforms approximately 80% of the time. (By the way, DFA’s funds meet or exceed their benchmarks by the same percentage). What IS new is that this is the first SPIVA study that has data extending back 15 years.

As Rex Sinquefield co-founder of DFA famously said over 20 years ago, “So who still believes markets don’t work? Apparently it is only the North Koreans, the Cubans and the active managers.”

Until next time –

Jim Heard is CEO at TrueWealth, LLC, a wealth management firm located in Atlanta. He has extensive experience spanning 30+ years in financial planning for Senior Executive Planning and Ultra-High Net Worth Individuals & Families. He provides the vision that enables TrueWealth team members to provide a truly exceptional wealth management experience to the individuals and families that the firm serves. He can be reached at or 404.487.0501.

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